The Issue The issue is whether, for the 2001-02 cost-reporting year, Respondent is entitled to recoupment of Medicaid reimbursements that it paid to Petitioner, in connection with its operation of numerous intermediate care facilities for the developmentally disabled (ICF/DD) and, if so, what is the amount of the overpayments.
Findings Of Fact The Audit For over 40 years, Petitioner has operated as a not- for-profit provider of ICF/DD services. These cases involve a compliance audit of ten of Petitioner's 2001-02 cost reports. During 2001-02, Petitioner operated over 300 ICF/DDs-- both owned and leased--in eight states and earned an annual revenue of over $90 million. A typical facility is a group home serving 24 developmentally disabled residents, although some of Petitioner's facilities serve much larger numbers of residents. Respondent outsourced the compliance audit of Petitioner's 2001-02 cost reports, as well as a similar audit of Petitioner's 2002-03 cost reports, which are not involved in these cases. Prior to completing the audit, the outside auditor withdrew from the engagement because it had concluded that it would be required to issue a disclaimer of opinion--an auditing nonopinion, as described below. In late 2005, two and one-half years after the outside auditor had commenced its work, Respondent's staff auditors assumed responsibility for the compliance audit. After examining the outside auditor's workpapers, Respondent's staff auditors found it necessary to re-perform at least some of the field work. By letter dated January 3, 2006, Respondent advised Petitioner of this development and, among other things, requested information about 16 identified motor vehicles and a statement concerning the 1981 Piper airplane noted in the May 29, 2002 Insurance sub-committee minutes. What was the plane used for and in what cost centers and accounts are the costs recorded? Possible costs would include fuel, insurance, depreciation, maintenance, and any salaries. Petitioner responded by a letter dated March 3, 2006, but this letter is not part of the record. Evidently, not much audit activity took place for the next couple of years. By letter dated January 25, 2008, Respondent advised Petitioner of several potential audit adjustments and noted that Petitioner had not provided the "detail general ledger" and information on aircraft and vehicles that Respondent had sought in its January 3, 2006 letter. In March 2008, Respondent's staff auditor visited Petitioner's main office in Miami and audited Petitioner's records for three days. He confirmed the existence of a 1981 Piper aircraft and a second aircraft, which he was unable to identify. Respondent's staff auditor determined that he still lacked information necessary to determine if Petitioner's aircraft expenses were reasonable when compared to common- carrier expenses. By letter dated May 12, 2008, Respondent informed Petitioner that, after the March 2008 onsite visit, several issues remained. Among the issues listed were the costs of two private aircraft, for which Respondent requested access to all flight and maintenance logs and detailed documentation of business purpose of trips, identification of aircraft bearing two cited tail numbers, the names of pilots on Petitioner's payroll, and any other cost information justifying the cost of the aircraft compared to common-carrier costs. By letter dated June 13, 2008, Petitioner responded to the May 12, 2008 letter. This letter states that the 1981 Piper was sold at an undisclosed time, and the maintenance logs had been delivered with the plane. The letter supplies registration documentation for the two tail numbers, a personnel file checklist for the pilot, and justification for the cost of operating an aircraft compared to the cost of using common carriers. On December 4, 2008, Respondent's staff auditor conducted an exit conference by telephone with Petitioner's principals and its independent auditor. Respondent's staff auditor proposed audit adjustments of various cost items that the auditor had guessed involved the aircraft. Petitioner did not agree with these proposed audit adjustments or various others that Respondent's staff auditor proposed. For the next 17 months, neither side contacted the other, until, on May 12, 2010, Respondent issued examination reports for the 2001-02 cost-reporting period. It had taken Respondent over seven years to issue examination reports based on cost reports that Petitioner had filed on February 3, 2003, for a cost-reporting year that had ended almost two years earlier. Cost Items in Dispute On January 28, 2011, Respondent filed a Notice of Filing of a spreadsheet that lists all of the adjustments that have been in dispute. During the hearing, the parties announced the settlement of other cost items. As noted by the Administrative Law Judge, these adjustments are shown on the judge's copy of this filing, which is marked as Administrative Law Judge Exhibit 1 among the original exhibits. Most of the items in dispute are Home Office costs, which are allocated to each of Petitioner's audited facilities. With the reason for disallowance, as indicated in the examination reports, as well as the Schedule of Proposed Auditing Adjustment (SOPAA) number, the Home Office costs in dispute are: Other consultants. "To disallow out of period costs." $7,000. SOPAA #19. Professional fees--other. "To disallow out of period costs." $1,500. SOPAA #20. Administrative Travel. "To disallow out of period costs." $1,038. SOPAA #21. Transportation--repairs. "To remove airplane costs not documented as being reasonably patient care related." $36,496. SOPAA #22. Transportation--fuel and oil. "To remove airplane costs not documented as being reasonably patient care related." $78,336. SOPAA #22. Insurance. "To remove airplane costs not documented as being reasonably patient care related." $24,000. SOPAA #22. Transportation--Depreciation. "To remove airplane costs not documented as being reasonably patient care related." $106,079. SOPAA #22. Transportation--Interest. "To remove airplane costs not documented as being reasonably patient care related." $57,714. SOPAA #22. Staff Development Supplies. "To remove unreasonable cash awards." SOPAA #26. At the conclusion of the hearing, the Administrative Law Judge encouraged the parties to try to settle as many of the issues as they could and, as to the aircraft issues, consider entering into a post-hearing stipulation due to the lack of facts in the record concerning this important issue. The parties produced no post-hearing stipulation and have not advised the Administrative Law Judge of any settled issues. The Administrative Law Judge has identified the remaining issues based on the issues addressed in the parties' Proposed Recommended Orders. With two exceptions, the remaining issues are all addressed in each Proposed Recommended Order. One exception is the Country Meadows return-on-equity issue, which neither party addressed. There is a small discrepancy between the amount of this adjustment on Administrative Law Judge Exhibit 1 and elsewhere in the record, so this issue may have been settled. If so, Respondent may ignore the portions of the Recommended Order addressing it. Also, Respondent failed to address the $123,848 in transportation salaries and benefits. Based on the services corresponding to these expenses and the motivation of Respondent's staff auditor in citing these reimbursements as overpayments, as discussed below, the decision of Respondent's counsel not to mention these items is understandable. The remaining issues are thus: Burial costs of $4,535 at the Ambrose Center. Return on equity adjustment of $3,418 at the Country Meadows facility. Legal fees of $4,225 for the Bayshore Cluster as out-of-period costs. Inclusion of state overhead of $9,529 at Mahan Cluster, $9,529 at Dorchester Cluster, and $9,529 at Bayshore Cluster. Transportation Salaries and Benefits of $123,848 at Main Office. Individual Cost Items Burial Costs After the death of an indigent resident at Petitioner's Ambrose Center, the family contacted Petitioner and informed it that they desired a burial, not a cremation, but could not afford to pay for any services. Petitioner's staff contacted several vendors about the cost of a simple burial service and, after negotiating a discount due to the unfortunate circumstances, selected a vendor. The vendor duly performed the burial service, which was attended by survivors of the deceased's group home, and Petitioner paid the vendor $4,535 for the service. For a burial service, the amount paid was reasonable. Petitioner's staff determined that the burial would have therapeutic value to the surviving residents of the deceased's group home. The quality of life of the residents is enhanced to the extent that they identify with each other as family. Petitioner's staff justifiably determined that a burial service would help sustain these familial relationships by bringing to the survivors a sense of closure, rather than subjecting them to the jarring experience of an unmarked departure of their fellow resident from their lives. However, routine counseling or therapy could have achieved the same results at less cost than a burial service. Out-of-Period Costs The so-called out-of-period costs are $1,038 of rental-car fees, $1,500 of computer consultation fees, $4,225 of legal fees, and $7,000 of "duplicated" insurance broker services. "Out-of-period" means that the expenses were incurred, and should properly be reported, outside of the cost- reporting year ending June 30, 2002. Generally accepted auditing standards (GAAS) and generally accepted accounting principles (GAAP) incorporate the principle of materiality. At least for the purpose of determining the cost-reporting year in which to account for an expense, the materiality threshold for Petitioner is tens of thousands of dollars. The out-of-period issue, which involves the integrity of the cost-reporting year, is different from the other issues, which involve the allowability of specific costs. The cost items under the out-of-period issue are all allowable; the question is in which cost-reporting year they should be included. The test of materiality is thus whether the movement of these cost items from one cost-reporting year to an adjoining cost-reporting year will distort the results and, thus, Petitioner's Medicaid reimbursements. Given Petitioner's revenues, distortion would clearly not result from the movement of the subject cost items, even if considered cumulatively. In theory, Petitioner could be required to amend the cost report for the year in which any of these expenses were incurred, if they were not incurred in the subject cost- reporting year. Unfortunately, by the time Respondent had generated the SOPAAs, the time for amending the cost reports for the adjoining cost-reporting years had long since passed, so a solution of amending another cost report means the loss of the otherwise-allowable cost. This result has little appeal due to Respondent's role in not performing the audit in a timely, efficient manner, but each out-of-period cost is allowable for different reasons. The car-rental expense arises out of an employee's rental of a car for business purposes in June 2001. The submittal and approval of the travel voucher, which are parts of the internal-control process, did not take place until after June 30, 2001. Although Petitioner's liability to the rental-car company probably attached at the time of the rental, the contingency of reimbursement for an improper rental was not removed until the internal-control process was completed, so it is likely that this is not an out-of-period expense. The legal expenses included services provided over the three months preceding the start of the subject cost-reporting year. The attorney submitted the invoice to Petitioner's insurer. After determining that Petitioner had not satisfied its applicable deductible, after June 30, 2001, the insurer forwarded the bill to Petitioner for payment. Absent evidence of the retainer agreement, it is not possible to determine if Petitioner were liable to the law firm prior to the insurer's determination that the payment was less than the deductible, so it is unclear whether this is an out-of-period expense. The computer-consulting work occurred about three months before the end of the preceding cost-reporting year, but the vendor did not bill Petitioner until one year later. This is an out-of-period expense. To the extent that these three items may have been out-of-period expenses, it is not reasonable to expect Petitioner to estimate these liabilities and include them in the preceding cost-reporting year. This is partly due to the lack of materiality explained above. For the car-rental and computer expenses, it is also unreasonable to assume that Petitioner's employees responsible for the preparation of the cost reports would have any knowledge of these two liabilities or to require them to implement procedures to assure timely disclosure of liabilities as modest as these. The last cost item is $7,000 for insurance broker services. This is not an out-of-period expense. In its audit, Respondent determined that this amount represents a sum that was essentially a duplicate payment for services over the same period of time to two different insurance brokers. This is a payment for services over the same period of time to two different insurance brokers for nonduplicated services reasonably required by Petitioner. Given the size and the nature of its operations, Petitioner has relatively large risk exposures that are managed through general liability, automobile liability, director and officer liability, property, and workers' compensation insurance. Paying premiums of $4-5 million annually for these coverages, which exclude health insurance, Petitioner retains insurance brokers to negotiate the best deals in terms of premiums, collateral postings, and other matters. Petitioner experienced considerable difficulty in securing the necessary insurance in mid-2001. At this time, Petitioner was transitioning its insurance broker services from Palmer and Kay to Gallagher Bassett. Difficulties in securing workers' compensation insurance necessitated an extension of the existing policy to July 15, 2001--evidently from its original termination date of June 30, 2001. Due to these market conditions, Petitioner had to pay broker fees to Palmer and Kay after June 30, 2001, even though, starting July 1, 2001, Petitioner began to pay broker fees to Gallagher Bassett. There was no overlap in insurance coverages, and each broker earned its fee, even for the short period in which both brokers earned fees. Employee Cash Awards Petitioner paid $8,500 in employee cash awards in the 2001-02 cost-reporting year as part of a new policy to provide relatively modest cash awards to employees with relatively long terms of service. For employees with at least 20 years of service, Petitioner paid $100 per year of service. The legitimate business purpose of these longevity awards was to provide an incentive for employees to remain with Petitioner, as longer-tenured employees are valuable employees due to their experience and lack of need for expensive training, among other things. The disallowance arose from the application of a nonrule policy that has developed among Respondent's staff auditors: employee compensation is not an allowable cost unless it is includible in the employee's gross income. The evident purpose of the nonrule policy is to exclude from allowable costs payments to employees who, due to their prominence in the ranks of the provider, are able to cause the provider to structure the payments so as to avoid their inclusion in the recipient's gross income (and possibly deprive a for-profit provider of an offsetting deduction for the payments). For the 2001-02 cost-reporting year, only three employees qualified for these payments. Two had 30 years of service, so each of them received $3,000, and one had 25 years of service, so he or she received $2,500. The total of the payments at issue is thus $8,500. The record contains ample support for the finding that the addition of $3,000 to the annual compensation paid to any of Petitioner's employees would not result in excessive compensation. Return on Equity During the cost-reporting year, Petitioner maintained $128,000 in a bank account dedicated for the use of the Country Meadows facility. This sum represented about three months' working capital for Country Meadows. At the time, Respondent encouraged providers to maintain cash reserves of at least two months' working capital, so this sum was responsive to Respondent's preferred working capital levels. Consistent with its purpose as working capital, funds in this account were regularly withdrawn as needed to pay for the operation of Country Meadows. The record does not indicate whether the bank paid interest on this account. Also, the concept of return on equity does not apply to a not-for-profit corporation such as Petitioner, which, lacking shareholders, lacks equity on which a return might be calculated or anticipated. State Overhead at Three Clusters This item involves three ICF/DD clusters that, at the time, were owned by, and licensed to, the State of Florida. Petitioner operated the facilities during the cost-reporting year pursuant to a lease and operating agreement. As in prior cost-reporting years, Respondent did not disallow the depreciation included in the subject cost reports for these three clusters. The record does not reveal whether Petitioner or the State of Florida bore the economic loss of these capital assets over time. But the treatment of depreciation costs is not determinative of the treatment of operating or direct care costs. During the subject cost-reporting year, for these three clusters, the State of Florida retained various operational responsibilities, including admissions. However, the costs at issue arise from the expenditures of the State of Florida, not the provider. The costs include the compensation paid to several, state-employed Qualified Mental Retardation Professionals, who performed various operational oversight duties at the three clusters, and possibly other state employees performing services beneficial to these three clusters. Petitioner never reimbursed the State of Florida for these costs. There is no dispute concerning the reasonableness of the compensation paid these employees by the State of Florida, nor the necessity of these services. The issue here is whether Petitioner is entitled to "reimbursement" for these costs, which amount to $5,139 per cluster, when the costs were incurred by the State of Florida, not Petitioner. Disallowed Transportation Costs and Airplane Costs The $123,848 in disallowed Main Office Transportation salary and benefits represents the salary and benefits of eight Main Office van drivers, who earn about $15,000 per year in pay and benefits. At least 40 residents of the Main Office are not ambulatory, but, like all of the other residents, need to be transported for medical, recreational, and other purposes. There probably remains no dispute concerning these expenses. They are reasonable and necessary. The explanation for why these costs were disallowed starts with the inability of Respondent's staff auditor to find the aircraft expenses in the financial records of Petitioner. It is not possible to determine why the audit failed to identify these expenses prior to the issuance of the examination report. On this record, the only plausible scenario is that Respondent's outside auditor was off-the-mark on a number of items while conducting the audit, Petitioner's representatives lost patience and became defensive, and, when the outside auditor withdrew from the engagement, Respondent's staff auditors, already fully engaged in other work, may not have had the time to add this substantial responsibility to their workload. It is clear, though, that, after the departure of Respondent's outside auditor, the audit failed due to a combination of the lack of Petitioner's cooperation and Respondent's lack of diligence. Unable to identify the aircraft expenses after years of auditing left Respondent with options. It could have continued the audit process with renewed diligence until it found the aircraft expenses. Or it could have declared as noncompliant the cost report, the underlying financial records, or Petitioner itself. Instead, Respondent converted the examination report from what it is supposed to be--the product of an informed analysis of Petitioner's financial records--to a demand to pay up or identify these expenses and, if related to aircraft, justify them. The problem with Respondent's choice is that, as noted in the Conclusions of Law, an audit requires Respondent to proceed, on an informed basis, to identify the expenses, analyze them, and, if appropriate, determine that they are not allowable--before including them as overpayments in an examination report. Proceeding instead to cite overpayments on the basis of educated guesses, Respondent entirely mischaracterized the $123,848 in transportation salaries and benefits, which did not involve any aircraft expenses. Respondent's educated guesses were much better as to the remaining items, which are $36,496 in transportation repairs, $78,336 in transportation fuel and oil, $24,000 in insurance, $106,079 in transportation depreciation, and $57,714 in transportation interest. But the process still seems hit-or-miss. Thinking that he had found the pilot's salary in the item for the van drivers' salaries, Respondent's staff auditor missed the pilot's salary, which was $30,000 to $40,000, as it was contained in an account containing $1.3 million of administrative salaries. Respondent's staff auditor also missed the hanger expense, which Petitioner's independent auditor could not find either. On the other hand, Respondent's staff auditor hit the mark with the $78,336 of fuel and oil, $106,079 of depreciation, and $36,496 in repairs--all of which were exclusively for Petitioner's aircraft. Respondent's staff auditor was pretty close with the transportation interest, which was actually $60,168. It is difficult to assess the effort of Respondent's staff auditor on insurance; he picked a rounded number from a larger liability insurance account, which includes aircraft insurance, but other types of insurance, as well. Respondent correctly notes in its Proposed Recommended Order that the auditing of aircraft expenses requires, in order, their identification, analysis, and characterization as allowable or nonallowable. As Respondent argues, the analysis must compare the aircraft expenses to other means of transportation or communication to determine the reasonableness of the aircraft expenses. As Respondent notes elsewhere in its Proposed Recommended Order, the analysis also must ensure that a multijurisdictional provider, such as Petitioner, has fairly allocated its allowable costs among the jurisdictions in which it operates. Although Respondent's staff auditor found a number of aircraft expenses, he did not try to compare these expenses with other means of travel or communication, so as to determine the reasonableness of these aircraft expenses, or determine if Petitioner had allocated these costs, as between Florida and other jurisdictions, in an appropriate manner. The failure of the examination report, in its treatment of the expenses covered in this section, starts with the failure to secure the necessary information to identify the expenses themselves, but continues through the absence of any informed analysis of these expenses. Respondent's staff auditor used the examination report's treatment of the items covered in this section as a means to force Petitioner both to identify and explain these costs. The fact that Respondent's staff auditor guessed right on many of the aircraft expenses does not mean that he had an informed basis for these guesses. At one point during his testimony, Respondent's staff auditor seemed pleasantly surprised that he had been as accurate as he was in finding these expenses. But, regardless of the basis that he had for the identification of these expenses, Respondent's staff auditor never made any effort to analyze the expenses that he had chosen to include in the examination report as aircraft expenses. Nor is the record insufficient to permit such analysis now. Among the missing data is the number of planes that Petitioner owned at one time during the subject cost-reporting year. It is now clear that, for awhile, the number was two, probably at the end of the cost-reporting year, but this was unknown at the time of the issuance of the examination report. It is unclear, even now, for how long Petitioner owned two planes, or whether it operated both planes during the same timeframe. Cost comparisons are impossible without the knowledge that the cost-comparison exercise is for one or two private aircraft. Likewise, Respondent lacked basic information about the aircraft, such as the planes' capacities and costs of operation, per hour or per passenger mile. Again, this information remains unknown, so it is still impossible to establish a framework for comparison to the costs of common carriers. The record includes a three-page log provided during the audit process by Petitioner to Respondent, which appears never to have analyzed it, probably due to its determination that it had not identified the aircraft expenses adequately. The log shows 118 trips for purposes other than maintenance or engineering during the subject cost-reporting year. The log shows the cities visited and a very brief description of the purpose of the trip. Not the detailed description requested by Respondent, the proffered description is often not more than the mention of a facility or meeting. The log does not show the duration of the trip, but often notes the number of persons on the plane. If the aircraft costs identified above, including the unassessed pilot salary, are divided by the number of trips, the per trip cost is about $2,600. Some trips list several persons, as many as seven. Some trips list only one or two persons. Some trips list "staff," so it is impossible to tell how many persons traveled. And some trips provide no information about the number of travelers. It is a close question, but these findings alone do not establish that the use of the aircraft was unreasonable when compared to common carriers. Also, Respondent lacked any information about the purpose of the trips, so as to be able to determine if they were necessary or whether they could have been accomplished by videoconference or telephone. And the hearing did not provide this information. Respondent's staff auditor also never considered allocation methods, which is understandable because this analysis would necessarily have followed the identification process, in which he justifiably lacked confidence, and the cost-comparison analysis, which he had never undertaken. At the hearing, Respondent's staff auditor briefly mentioned other allocation methods, but never criticized the approved allocation method used by Petitioner. Although an approved allocation method might not offset disproportionate travel expenses to West Virginia and Connecticut, the record is insufficient to determine that the chosen allocation method was inappropriate or transferred excessive expenses to Florida for Medicaid reimbursement.
Recommendation Based on the foregoing, it is RECOMMENDED that the Agency for Health Care Administration enter a Final Order determining that, for the 2001-02 cost- reporting year, Petitioner has been overpaid $23,370 (including $3,418 for return on equity, if not already settled), for which recoupment and a recalculation of Petitioner's per-diem reimbursement rate are required. DONE AND ENTERED this 25th day of April, 2011, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of April, 2011. COPIES FURNISHED: Daniel Lake, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 Steven M. Weinger, Esquire Kurzban Kurzban Weinger Tetzeli & Pratt, P.A. 2650 Soutwest 27th Avenue Miami, Florida 33133 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 Justin Senior, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308
The Issue The issue is the amount payable to Respondent, Agency for Health Care Administration (Respondent or AHCA), in satisfaction of Respondent's Medicaid lien from a settlement offer received on behalf of Petitioner, Ciara Thomas.
Findings Of Fact Ciara Thomas is a six-year-old female who currently resides in St. Petersburg, Florida. Respondent is the state agency authorized to administer Florida's Medicaid program. See § 409.902, Fla. Stat. On October 18, 2012, Ciara, then two and one-half weeks shy of her third birthday, was severely injured when she fell into a bathtub and was scalded by hot water. At that time, Ciara, her mother, and a brother were tenants of a residential dwelling located at 8181 91st Terrace, Seminole, Florida, which was owned by Selvie Berberi, the landlord. Ciara suffered from second- and third-degree burns over 65 percent of her total body surface area, and in particular, to her back, buttocks, chest, bilateral tower extremities, bilateral upper extremities, and genitals. Ciara received extensive medical care and treatment for her scald burns at Tampa General Hospital, where she was hospitalized from October 18, 2012, through January 9, 2013. The parties have stipulated that through the Medicaid program, AHCA spent $174,675.05 on behalf of Ciara. Because of the extensive nature of the burns on her lower extremities and entire back, Ciara has undergone five skin grafts. She has completed physical therapy in the burn center and does not anticipate any further medical treatment until she is fully grown. Ciara has very visible scars over much of her body, which will not likely improve over time. The skin feels rubbery, with no smooth texture, and it is affected by the weather. Whenever she is outside, Ciara must be completely covered with clothing. She attends school but cannot play outdoors due to potential injury or infection. Because of the condition of her skin, she is subjected to stares by other persons and students, causing her to be extremely self- conscious. Petitioner filed suit in Pinellas County Circuit Court against the landlord in negligence for her failure to provide safe and proper working plumbing to the rental home. Among other things, the water heater had been set far above the legal limits of 120 degrees. During the pendency of that litigation, the landlord's homeowner's insurance company offered payment in settlement in the amount of $101,000.00, representing the $100,000.00 coverage limit for bodily injury liability, and $1,000.00 as payment of the coverage limit of the policy's medical payments provisions. At hearing, Ciara's mother indicated that she intends to accept the offer if it is approved by the court. AHCA contends it should be reimbursed for Medicaid expenditures on behalf of Petitioner pursuant to the formula set forth in section 409.910(11)(f). Under the formula, the lien amount is computed by deducting a 25 percent attorney's fee ($25,250.00) and taxable costs ($879.59) from the $101,000.00 recovery, which yields a sum of $74,870.41. This amount is then divided by two, which yields $37,435.21. Under the statute, Respondent is limited to recovery of the amount derived from the statutory formula or the amount of the lien, whichever is less. Petitioner agrees that under the statutory default allocation, AHCA would be entitled to $37,435.21. Section 409.910(17)(b) provides that a Medicaid recipient has a right to rebut the default allocation described above. Utilizing that provision, Petitioner asserts that reimbursement should be limited to the same ratio as her recovery amount is to the full or total value of her damages. Under this theory, Petitioner contends that had her case gone to trial, a jury would have awarded at least $3.5 million, or the mid-point between $3 million and $4 million. Because the settlement represents a recovery of 2.9 percent of the valuation of her total damages, Petitioner contends she should pay 2.9 percent of AHCA's past medical expenses, or $5,066.00, to satisfy the Medicaid lien. The statute requires that Petitioner substantiate her position by clear and convincing evidence. To support the proposed full value of damages, Petitioner presented the testimony of Keith Ligori, a trial attorney in Tampa for the last 15 years, who specializes in all types of personal injury cases. Mr. Ligori has handled similar cases "numerous times," and on a daily basis he makes assessments of the valuation of potential claims. He is familiar with the reasonable valuation of personal injury cases in the greater Tampa Bay area, including Pinellas County. Mr. Ligori presented fact and opinion testimony on the issue of valuation of damages. Before forming his opinion on damages in this case, Mr. Ligori reviewed the medical records, including photographs of Ciara, interviewed the child and her mother, and discussed the case with her trial counsel. He also relied on his training and experience and familiarity with other cases in the Tampa Bay area. Based on his review of the case, Mr. Ligori valued total damages, conservatively, at $3.5 million. This figure took into account non-economic factors, including mental anguish, loss of ability or capacity to enjoy life, disability, and scarring and disfigurement, and economic damages consisting of the medical expenses paid by AHCA. Mr. Ligori testified that if he was actually trying the case before a jury, he would seek damages of between $5 million and $10 million. The undersigned finds the valuation of damages at $3.5 million to be credible and persuasive and is hereby accepted. In summary, by clear and convincing evidence, Petitioner has demonstrated that, conservatively, the full value of her damages is $3.5 million. The settlement amount of $101,000.00 is 2.9 percent of the total value of Petitioner's damages. The application of this factor to total medical expenses incurred by AHCA results in an allocation of $5,066.00 as a reasonable payment of the Medicaid lien.
The Issue The issue presented for determination herein is whether or not disciplinary action should be taken against the Respondents' licenses as funeral directors, embalmers and a funeral establishment based on conduct set forth hereinafter in detail based on allegations in the Administrative Complaint filed herein dated February 2, 1982.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the oral and documentary evidence adduced at the hearing, and the entire record compiled herein, the following relevant facts are found. At all times pertinent to this proceeding, Respondent E. Stone, held a license to practice funeral directing and embalming and acted as the funeral director in charge of Respondent Stone's Funeral Home. (Petitioner's Exhibit No. 1) At all times pertinent to this proceeding, Respondent Janorise G. Stone (herein sometimes called Mrs. Stone), held a license to practice funeral directing and embalming. (Petitioner's Exhibit No. 2) At all times pertinent to this proceeding, Respondent Stone's Funeral Home was a licensed funeral establishment. (Petitioner's Exhibit No. 1) On or about September 12, 1979, Gerald M. Jordan was stillborn to Mr. and Mrs. Earnest Jordan. The Jordans, not lawfully married at the time, subsequently did so. Mrs. Jordan contacted the Respondents' establishment for the purpose of arranging a funeral for the deceased Jordan. Mr. Jordan went to Stone's Funeral Home and met with Rudolph E. Stone, the owner/ manager of Stone's Funeral Home. Rudolph Stone is not licensed as a funeral director. Respondent, Janorise Stone, quoted Mr. Jordan a $95.00 charge for a burial, without funeral services, for his son. Respondent Janorise Stone advised Mr. Jordan that she would call Riverview Memorial Gardens (Riverview) an area cemetery to find out how much it would cost to bury the child there. After speaking on the phone to an agent of Riverview, Mrs. Stone advised Mr. Jordan that the price would be $50.00, i.e., $25.00 for the perpetual care fund and $25.00 for the burial space. Mr. Jordan paid $50.00 to Stone's Funeral Home. The payment was accepted by Respondents' maid who gave Mr. Jordan a receipt for the payment. The baby was buried on September 20, 1979. The Jordans never asked the Respondents to return the $25.00 fee paid for the burial space at Riverview. 2/ There was no written agreement or contract evidencing the terms of the services provided to the Jordans by the Respondents. However, Mrs. Stone gave the Jordans an itemized statement for the services rendered. Mrs. Geraldine Jordan stated that she was present when her husband was told by Mrs. Stone that the burial space at Riverview was $50.00. Mrs. Stone had telephonically inquired of Riverview the price of a grave site for a premature baby. She advised the Jordans that the fee would be $50.00 following the telephone inquiry. During December, 1981, Mrs. Stone delivered to Mrs. Jordan a check in the amount of $25.00 which was specifically given as a "refund on perpetual care" for Riverview. Doris Shumway acted as secretary for Riverview during September, 1979. Mrs. Shumway recalled that Riverview had been recently purchased in a receivership proceeding from American Bank of Merritt Island, Florida. Mr. R. J. Witek, the purchaser, related that that was his first endeavor in the management of cemeteries and was his second dealing with the burial of an infant. As a result, Riverview was then developing a pricing policy and in fact relied upon the advice and guidance of the Respondents as well as other area funeral homes for assistance in formulating a pricing policy for burial sites and other related services. (Testimony of Shumway and R. J. Witek) Mr. Witek related that at one period there was in fact a $50.00 charge for the burial of a newborn infant while the cemetery had been in receivership. Throughout the period while the receivership proceeding was pending, and subsequent to Witek's purchase of the cemetery, the price for the burial of a newborn infant at Riverview fluctuated until a pricing policy was established. (Testimony of Witek) Mrs. Jordan, mother of the deceased, did not meet with Respondents until approximately three months after the burial of her son. At that time, Respondents provided her with an itemized list of the services provided and the costs therefor. The Respondent establishment has been in existence since approximately 1923. The subject complaint represents the second administrative complaint in the Respondent establishment's fifty-nine (59) year existence. Mrs. Stone, Respondents' licensed funeral director and embalmer, delivered to Mrs. Jordan a check for the sum of $25.00 after she was contacted by the Petitioner and was advised that the Jordans had made a $25.00 overpayment for the burial services of the deceased Jordan. Mrs. Stone checked her records and confirmed the existence of an overpayment and immediately refunded same to Mrs. Jordan. (Deposition of R. J. Witek and Exhibit 1 attached thereto) Mrs. Stone reviewed the pricing schedule of all the other area cemeteries for the benefit of, and at the request of, Mr. Jordan in arriving at a fee which was charged to the Jordans. Mrs. Stone had no specific independent recollection as to the exact payment to Riverview on behalf of the Jordans. Mrs. Stone denied any attempt to misrepresent or otherwise defraud the Jordans of any monies. She related that the overcharge occurred as a result of the fluctuating fee schedule which was in effect at Riverview due to its (Riverview) new entry in the cemetery business. Mrs. Stone recalled providing Mrs. Jordan an itemized statement for the services provided them during 1979 although no formal contract with signatures was given the Jordans. Mrs. Stone reiterated the fact that the Jordans were not provided an itemized statement or contract detailing the specifics respecting prices and the services offered inasmuch as the Jordans did not meet with the Respondents until some three (3) months after the burial of their son.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby, RECOMMENDED: (1) That the Administrative Complaint filed herein against Respondents be DISMISSED. 3/ RECOMMENDED this 18th day of November, 1982, in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1982.
The Issue What amount of Petitioner’s malpractice settlement must be paid to Respondent, Agency for Health Care Administration (Agency), to satisfy the Agency’s $13,904.06 Medicaid Lien?1/
Findings Of Fact On September 12, 2015, [Petitioner] was a 28-year-old single male living alone in Tampa, Florida and enrolled as a student at the University of South Florida working on his master’s degree in education. Because he recently ceased his employment with the Hillsborough County School Board, [Petitioner] had no health insurance. He called 911 for emergency medical services due to severe abdominal pain and was taken by EMS to the Emergency Department at St. Joseph’s Hospital where he was diagnosed with acute pancreatitis and admitted. His condition worsened and was complicated by abdominal distention that made his breathing difficult. In the evening of September 13th, [Petitioner] was transferred to the Medical Intensive Care Unit (“ICU”) because of a rapidly worsening condition and need for close monitoring. Over the next several hours, vital sign monitoring showed high heart and respiratory rates. A consulting physician found “acute respiratory insufficiency likely developing ARDS,” and directed he be “monitor closely, may need to be on mechanical ventilation, his work of breathing is hard to keep current sats [sic]”. During the early morning of September 14, [Petitioner’s] heart rate and respiratory rates remained high, he was short of breath, and given multiple doses of Morphine for severe pain and Ativan for agitation/anxiety, which drugs are known to suppress respiratory function. Throughout the morning, [Petitioner] was in a perilous condition due to a combination of his prolonged efforts to breathe, suppressive medications, and systemic complications of acute pancreatitis including electronical abnormalities associated with hypokalemia and hypocalcemia, and with electrocardiographic changes resulting in arrhythmia, conduction abnormalities and changes in cardiac T wave and QT period. At around 11:30, [Petitioner] attempted to perform a breathing exercise as instructed earlier that morning which required him to get on his hand and knees to relieve the pressure on his chest. [Petitioner’s mother], a licensed and practicing RN herself, was present and attempted to help him when his cardiac monitoring leads became disconnected. At this time, the attending RN was on break. An unknown RN reported [Petitioner] to have a change in the condition “with increased confusion and restlessness” and a call was made to the ICU specialist who issued verbal orders for Haldol, a medication used for sedation but in combination with the Morphine, Ativan and Labetatol, further lowers blood pressure and is contraindicated for cardiac arrhythmias. Without informing [Petitioner or his mother], the nursing staff mistakenly issued a "code grey" to control [Petitioner] and the nursing supervisor approved the administration of the Haldol without any physician assessment or knowing his cardiac status because the monitor was not connected. The ICU specialist who ordered the Haldol was close by in the ICU area but did not evaluate [Petitioner] or assess his condition, cardiac status and need for mechanical ventilation before the Haldol was administered. Immediately upon administration of the Haldol, [Petitioner] became “agonal” and his heart was thrown into a cardiac arrhythmia (PEA) causing a prolonged time period where his brain was deprived of oxygen that resulted in permanent hypoxic encephalopathy so that [Petitioner] now lives in a persistent minimally conscious state. The acute pancreatitis which [Petitioner] initially sought treatment resolved without further complications. His current medical condition is only complicated by the sequelae of his hypoxic encephalopathy and persistent minimally conscious state. Petitioner complied with all requirements of Chapter 766, Florida Statutes, including, all pre-suit requirements and presuit investigation of claims against the treating Hospital, the ICU Specialist and her employer that were corroborated by an expert witness, which were rejected. On October 27, 2017, Petitioner filed a lawsuit in the Circuit Court for Hillsborough County Florida, Case No. 17-CA-009829, against the treating Hospital and the ICU Specialist asserting claims for medical negligence. Based on the foregoing limitations, the medical malpractice claims were settled for a total of $1,975,000, which was approved by the Court to be in the best interest of [Petitioner]. [The Agency], through its Medicaid program, provided medical assistance to [Petitioner] in the amount of $13,904.36. During the pendency of the medical negligence case, [the Agency] was notified of the action and asserted a $13,904.06 Medicaid lien against Petitioner's cause of action and settlement. [The Agency] did not commence a civil action to enforce its rights under §409.910 or intervene or join in [Petitioner’s] action against Defendants. [The Agency] did not file a motion to set-aside, void or otherwise dispute Petitioner's settlement with Defendants. Application of the formula at §409.910(1l)(f) to the settlement requires payment to [the Agency] in the amount of the full $13,904.06 Medicaid lien. Petitioner deposited the full Medicaid lien amount in an interest-bearing account for the benefit of [the Agency] pending an administrative determination of [the Agency’s] rights, and this constitutes "final agency action" for purposes of chapter 120, pursuant to §409.910(17). Credible, Unimpeached, and Unrebutted Testimony Mr. Tonelli is the only person who testified about the value of the various elements of damages making up Petitioner’s malpractice claim. Mr. Tonelli has practiced law for 44 years. He has practiced in Tampa, Florida, the venue where Petitioner’s case would have been tried if it had not settled. He first practiced primarily in the area of personal injury defense. Presently, Mr. Tonelli spends over 25 percent of his time as a mediator. Since 1985, he has mediated many medical negligence cases. Mr. Tonelli also serves as a guardian ad litem in approximately 50 cases per year. Usually two to five of the cases involve catastrophic injury. Mr. Tonelli has served as counsel in 50 to 75 civil trials. Approximately 20 were jury trials. Mr. Tonelli’s practice includes review of medical records and life care plans. He also consults with economists about lost wage claims and works with doctors to identify the nature and extent of injuries and costs of medical services for injured persons. Mr. Tonelli participates in regular intake review of personal injury cases for his firm. The review includes evaluating the recoverable damages. He informs himself about jury awards and settlement amounts through his firm work, his participation in the American Board of Trial Attorneys, and his mediation practice. Mr. Tonelli was Petitioner’s Guardian Ad Litem. He reviewed the case and the proposed settlement and reported to the court about whether the settlement was in Petitioner’s best interests. Mr. Tonelli’s knowledge, skill, and experience qualify him to provide an opinion about the value of the elements of the damages for Petitioner’s malpractice claims against the hospital and the physician. Mr. Tonelli reviewed Petitioner’s hospital and physician medical records. He also reviewed the deposition of Roland Snyder, M.D., who prepared the life care plans admitted into evidence. Between Mr. Tonelli’s service as Guardian Ad Litem for Petitioner and his record review to prepare for his testimony, he had sufficient facts and data to form an opinion about the value of elements of damages of Petitioner’s malpractice claims. Also, he reasonably and reliably applied principles and methods based upon his knowledge, skill, and experience to provide a credible and conservative determination of the value of each element of damages that make up Petitioner’s malpractice claim. His testimony was unrebutted, unimpeached, credible, and persuasive. Injuries and Negligence Petitioner suffers from profound anoxic encephalopathy. This brain damage leaves him in a permanent, minimally conscious state, just barely more conscious than a patient in a vegetative state. He cannot speak, walk, or care for himself. Petitioner lives in pain. He breathes and eats only with the assistance of a tracheostomy. He takes nourishment through a “G-tube.” This is a gastrojejunostomy tube that delivers nutrients directly to the stomach. Petitioner requires daily care and assistance in every task of life from eating to waste elimination. His condition will not change for his estimated 20-year remaining life span. Petitioner’s multiple, severe medical conditions require that he live those 20 years in a long-term care facility with medical services, such as a skilled nursing home. This condition resulted from treatment he received for pancreatitis, a condition from which he fully recovered. While in the hospital, Petitioner developed cardiac and respiratory problems. A cascading series of improper prescriptions exacerbated Petitioner’s medical problems leading to catastrophic injuries resulting in his current condition. Damages The elements of damages for Petitioner’s malpractice claims are past medical expenses, future medical expenses, loss of current income, loss of future income, pain and suffering, and loss of enjoyment of life. The value of the damages in Petitioner’s malpractice claims falls within a range of $25,000,000 to $35,000,000. The amount of $25,000,000 is a reasonable, conservative value to place on Petitioner’s damage claims. The only evidence of past medical expenses is the stipulation that Medicaid paid $13,904.36. Consequently, that is the amount of past medical expenses. Future medical expenses in the form of costs for continued treatment and supports necessary to maintain Petitioner’s existence are a significant part of the damages. As explicated in two detailed life care plans, those expenses will range from $14,535,508.26, for residence in a modified home with supportive caregivers, to $31,082,301.36, for residence in a skilled long-term nursing facility. Loss of current income, comparatively, is not a major factor in this case. Loss of future income is. Petitioner was 30 years old earning $34,000 per year teaching “at-risk” children who would have otherwise been suspended from school. He was dedicated to his profession, volunteered at Boys and Girls Clubs, and had just been accepted to a master’s degree program. Petitioner’s lost future income ranges between $750,000 to $1,000,000. Petitioner’s injuries and resulting conditions are catastrophic. Pain and suffering damages and loss of enjoyment of life damages easily range between 10 and 20 million dollars. They could reasonably exceed 50 million dollars. Consideration of the value of the elements of damages affirms that the total damages that would have been proven if Petitioner’s claims had been tried would have been at least $25,000,000. Settlement Realities Petitioner’s claims were not tried. Petitioner had a strong malpractice claim against the doctor. The doctor, however, had only $500,000 worth of insurance coverage. There is no evidence of assets of the doctor that could have been reached to enforce a judgment. Petitioner’s claim against the hospital was not as strong. The hospital had significant liability and causation defenses. The doctor was not an employee or agent of the hospital. Hospital employees in most instances were following the doctor’s instructions, including when administering the medications that caused the damages. The limits of the doctor’s insurance coverage and the liability and causation issues of the claim against the hospital resulted in the decision to settle. Uncertainty about the provability or amount of damages was not a factor. The trial court approved the settlement. The settlement amount is 7.9 percent of the value of Petitioner’s claims. The stipulated amount of medical expenses the Agency paid through the Medicaid program is $13,904.36. The reasonable inference from the record in this case is that applying the 7.9 percent ratio of claims value to settlement recovery to the stipulated amount of medical expenses paid by the Medicaid program demonstrates that $1,098.44 of Petitioner’s settlement recovery was for past medical expenses. The Agency did not call witnesses, present evidence of the value of damages, or propose an alternative way to value damages.
The Issue The issue in this proceeding is how much of Petitioner’s settlement proceeds should be reimbursed to Respondent, Agency for Health Care Administration (“AHCA”), to satisfy AHCA's Medicaid lien under section 409.910, Florida Statutes, from settlement proceeds he received from a third party.
Findings Of Fact The following findings are based on testimony, exhibits accepted into evidence, and admitted facts stated in the Joint Pre-Hearing Stipulation. Facts Concerning Underlying Personal Injury Matter and Giving Rise to Medicaid Lien On January 6, 2012, Arnie Solheim, a then 15-year-old boy, ran away from his group home and was struck by a vehicle while walking up an interstate ramp. Mr. Solheim had a history of running away from his group home residence. As a result of the incident, Mr. Solheim suffered permanent and severe injuries including brain damage, blindness in one eye, and paralysis. Due to his injuries, Mr. Solheim will require 24 hours-a-day supervision for the remainder of his life. Mr. Solheim’s medical care related to the injury was paid by Medicaid, and Medicaid through AHCA provided $187,302.46 in benefits. Accordingly, $187,302.46 constituted Mr. Solheim’s full claim for past medical expenses. Mr. Solheim’s mother, Rosepatrice Solheim, was appointed Mr. Solheim’s Plenary Guardian. Rosepatrice Solheim, as Mr. Solheim’s Guardian, filed a personal injury action against the parties allegedly liable for Mr. Solheim’s injuries (“Defendants”) to recover all of Mr. Solheim’s damages, as well as her and her husband’s individual damages associated with their son’s injuries. Mr. Solheim’s personal injury action was settled through a series of confidential settlements in a lump-sum unallocated amount. This settlement was approved by the circuit court. During the pendency of Mr. Solheim’s personal injury action, AHCA was notified of the action and AHCA asserted a Medicaid lien of $187,302.46 against Mr. Solheim’s cause of action and settlement of that action. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Mr. Solheim’s action against the Defendants. By letter dated October 9, 2019, AHCA was notified of Mr. Solheim’s settlement. To date, AHCA has not filed a motion to set-aside, void, or otherwise dispute Mr. Solheim’s settlement. The Medicaid program through AHCA spent $187,302.46 on behalf of Mr. Solheim, all of which represents expenditures paid for Mr. Solheim’s past medical expenses. Mr. Solheim’s taxable costs incurred in securing the settlement totaled $76,229.38. Application of the formula at section 409.910(11)(f) to Mr. Solheim’s settlement requires payment to AHCA of the full $187,302.46 Medicaid lien. Expert Testimony Petitioner called two experts to testify on his behalf pertaining to valuation of Petitioner’s damages, Richard Filson and Karen Gievers. Mr. Filson, an attorney practicing law at Filson and Fenge law firm in Sarasota, Florida, has been practicing law for 36 years. He represented Mr. Solheim in the underlying case. In addition to Petitioner’s case, he has represented clients in personal injury matters representing children and childrens’ rights cases, including cases involving brain injury and paralysis. Mr. Filson evaluated Petitioner’s case and opined that $10 million was a conservative valuation of the case. The valuation of the case encompasses past medical expenses, future medical expenses, economic damages, and pain and suffering. Mr. Filson pursued the action against three defendants. He testified that there would be no admission of liability. The group home was alleged to have failed to appropriately evaluate the risk and placement of Mr. Solheim, including placing Mr. Solheim in a locked unit to maintain his safety. However, there were issues with recovering from the facility. There was a dispute regarding the director’s degree of responsibility for Mr. Solheim’s elopement. As a result, Mr. Filson opined that Petitioner settled the case for a lower amount because of liability and collectability issues with the group home. Mr. Filson opined that Mr. Solheim’s $1,150,00.00 settlement represented 11.5 percent of the full $10 million value of his claim, including past medical expenses. He relied upon the comprehensive plan and the extent of Mr. Solheim’s catastrophic injuries to assess the value of the case. Mr. Filson opined that the allocation formula is 11.5 percent. The past medical expenses totaled $187,302.46. That figure multiplied by 11.5 percent would result in recovery of $21,539.78 of the settlement proceeds allocated to past medical expenses. Karen Gievers also testified as an expert regarding valuation of Mr. Solheim’s claim. Ms. Gievers, a licensed attorney for 42 years and a former circuit court judge, focuses her practice on civil litigation. In her practice as an attorney, she has handled personal injury cases involving catastrophic injuries similar to Mr. Solheim’s injuries. Like Mr. Filson, she has also represented children in her practice. Ms. Gievers opined that the value of Mr. Solheim’s case was conservatively estimated at $10 million. She opined that Mr. Solheim’s settlement amount of $1,150,000.00 resulted in a recovery of 11.5 percent of the full value of his claim. She opined that applying the 11.5 percent to each damage category is the appropriate way to allocate the amount of damages across all categories. Thus, applying the allocation formula of 11.5 percent to the $187,302.46 claim for past medical expenses would be $21,539.78. Ms. Gievers looked at Mr. Solheim’s economic and noneconomic damages in her valuation of the case. She reviewed the comprehensive care plan and noted that all costs were not included, which would add to the value of the case being greater than Mr. Solheim’s actual recovery. Petitioner asserted that the $1,150,000.00 settlement is far less than the actual value of Petitioner’s injuries and does not adequately compensate Mr. Solheim for his full value of damages. Therefore, a lesser portion of the settlement should be allocated to reimburse AHCA, instead of the full amount of the lien. Ultimate Findings of Fact Mr. Filson and Ms. Gievers credibly opined that a ratio should be applied based on the full value of Petitioner’s damages, $10,000,000.00, compared to the amount that Petitioner actually recovered, $1,150,000.00. Based on this formula, Petitioner’s settlement represents an 11.5 percent recovery of Petitioner’s full value of damages. Similarly, the AHCA lien should be reduced and the amount of reimbursement to AHCA should be 11.5 percent of the Medicaid lien. Therefore, $21,539.78 is the portion of the third- party settlement that represents the amount AHCA should recover for its payments for Mr. Solheim’s past medical care. The expert witnesses’ testimony was supported by their extensive experience in valuing damages and their knowledge of Mr. Solheim’s injuries. AHCA, on the other hand, did not offer any witnesses or documentary evidence to question the credentials or opinions of either Mr. Filson or Ms. Gievers. AHCA did not offer testimony or documentary evidence to rebut the testimony of Mr. Filson or Ms. Gievers as to valuation or the reduction ratio. AHCA did not offer alternative opinions on the damage valuation method suggested by either Mr. Filson or Ms. Gievers. Based on the record, the testimony of Petitioner's two experts regarding the total value of damages was credible, unimpeached, and unrebutted. Based on the evidence in the record, the undersigned finds that, Petitioner proved by a preponderance of the evidence that a lesser portion of Mr. Solheim’s settlement should be allocated as reimbursement for past medical expenses than the amount AHCA calculated. Accordingly, AHCA is entitled to recover $21,539.78 from Petitioner’s recovery of $1,150,000.00 to satisfy the Medicaid lien.
Findings Of Fact Respondent was issued Embalmer's license No. EM645 in 1945, and Funeral Director's License No. FD504 in 1947. He was also issued a dual license No. FE64 in 1947. By Amended Final Order, dated March 27, 1980, Petitioner suspended Respondent's funeral director's and embalmer's licenses for a period of one year. Following the one year suspension, which concluded on March 26, 1981, Respondent was placed on three years license probation. The complaining witness, Samuel C. Rogers, employed Respondent between June 1980, and March, 1982, essentially to operate one of two funeral homes he owned 1/. His employment arrangements with Respondent were not clear (discussed below), but Rogers generally intended to capitalize on Respondent's ability to attract funeral business. Rogers was aware that Respondent could not embalm under the terms of his probation. He believed initially that Respondent could perform funeral directing duties and assigned him such responsibilities. However, Rogers continued to permit Respondent to perform funeral directing tasks even after he learned that this was improper under the terms of his probation. The funerals of Queenie M. Edwards, in December, 1980, and Jacob L. Maxwell, in late February or early March, 1981, were arranged and conducted by Respondent. Thus, during the period of his license suspension, Respondent held himself out to the public as a funeral director and did perform in this capacity. Respondent typically made all funeral arrangements with the family of the deceased, including caskets, flowers, limousines, drivers, and cemetery lots. He prepared itemized statements for services provided and collected direct payments as well as insurance assignments. He sometimes cashed client checks and retained the proceeds to pay funeral service expenses, purchase advertising materials and make funeral home improvements He also kept some of these funds for his own use and admits he owes Rogers up to $500. In other instances, Respondent brought cash to Rogers' office where he turned it over to the secretary-bookkeeper or Rogers himself. Respondent kept no records and Rogers' records were incomplete and therefore inconclusive. No specific funds or payments were identified which Respondent was proven to have diverted wrongfully. Rogers claims that Respondent misappropriated at least $30,000. Petitioner's evidence indicates that some $8,000 came into Respondent's hands for which there are no records to establish receipt by Rogers. However, the testimony of Respondent and two other former employees of Rogers established that Respondent did turn over cash funds to Rogers or his secretary-bookkeeper on various occasions and that an immediate record of such receipts was not always made. Further, Rogers has also accused his former secretary-bookkeeper of misappropriation and is apparently pursuing this claim in another forum. The employment arrangements between Rogers and Respondent were not supported by written agreement. Rogers claims he employed Respondent on a $300 per week salary and did not authorize him to collect funeral service payments. However, he did not discipline Respondent when be became aware of his collection practices. Rather, it was not until he personally attempted to collect on various accounts which customers had already settled with Respondent that he discharged him. Respondent contends he was in partnership with Rogers and was given latitude to make all funeral arrangements, including collections and expenditures for services, building maintenance and advertising. He further viewed his retention of certain funds as due him for his services to the business. Rogers' former secretary-bookkeeper understood that Rogers had employed Respondent on a commission basis. Therefore, no income tax or social security contributions were made on his behalf. In view of such conflicting testimony, there can be no finding that Respondent's employment arrangements precluded his collection of customer payments or required that all such funds be turned over to Rogers.
Recommendation Based on the foregoing, it is RECOMMENDED: That Respondent be found guilty of violating Subsection 470.036(1)(i), F.S., as charged in Count III of the Administrative Complaint. That all other charges contained in the Administrative Complaint be dismissed. That Respondent's funeral director's license and dual license be revoked. DONE and ENTERED this 12th day of April, 1983, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of April, 1983.
The Issue The issue to be decided is the amount payable to Respondent in satisfaction of Respondent's Medicaid lien from a settlement, judgment, or award received by Petitioner from a third party under section 409.910(17), Florida Statutes.1/
Findings Of Fact It was stipulated that Petitioner, Mr. Nelson Puente, sustained gunshot injuries on or about February 4, 2010, for which he received medical treatment. Mr. Puente had Medicaid at that time, and Medicaid paid the amount of $112,397.79 to treat Mr. Puente for his injuries. As a result of his injuries, Mr. Puente has permanent scars on his abdomen and thigh. Mr. Mario Quintero, Jr., Esquire, represented Mr. Puente in a personal injury case alleging negligent security. Mr. Quintero has been practicing law in Florida for over 30 years, specializing in personal injury litigation. He has tried well over 150 cases and has handled catastrophic injury cases that were similar to Mr. Puente's case. Mr. Quintero is an expert on the valuation of personal injury cases. Mr. Quintero interviewed Mr. Puente regarding the scope of his injuries, reviewed extensive medical records, considered the prognosis for improvement, and examined jury verdict reports and facts from similar cases to reach an opinion as to the value of Mr. Puente's damages. Mr. Quintero testified that if he had presented the case to a jury that he would have asked for damages for past medical expenses, future medical expenses, future loss of earning capacity, pain and suffering, permanent scarring, and inability to lead a normal life. Mr. Quintero testified that, in addition to the $112,397.79 paid by Medicaid, the Florida Patients' Compensation Fund2/ or another fund paid for some of Mr. Puente's medical care. There was no evidence presented as to the specific amount that this fund paid. Mr. Quintero testified: I don't have the figures in front of me right now. But it was probably significantly less than Medicaid. * * * I do know, I just don't remember. I am--my file is three boxes large. And for purposes of my testimony here today, I don't believe it was necessary for me to bring in those three boxes and go through everything. So I mentioned it would be less than Medicaid, but I don't remember the exact amount. The exact amount for which the fund's claim was settled was similarly not in evidence, but Mr. Quintero characterized it as a "few thousand dollars." He testified, "They understood the severity of Mr. Puente's injuries and damages, they knew the amount of the settlement, and they took-—they factored in everything and significantly reduced the amount that we had to repay them." Mr. Quintero said that he would have asked a jury for significant damages for future lost earning capacity. He noted that Mr. Puente was 35 years old at the time of the settlement, had a long life expectancy, and the "potential to earn 35 to 40 thousand dollars per year." Mr. Quintero did not offer a dollar estimate of lost future earnings. There was no evidence as to Mr. Puente's occupation. Mr. Quintero admitted on cross- examination that he was "pretty sure" that Mr. Puente was unemployed at the time of his injuries. Mr. Quintero testified that future medical expenses would "probably not" be very large, based upon his understanding that "other than maybe palliative issues with therapy and things like that," there wasn't that much more that could be done for Mr. Puente. Mr. Quintero noted that "there probably would be some rehabilitation that he could benefit from in the future, but nothing major." On cross examination, he admitted that there was nothing in evidence to indicate that there would not be significant future medical expenses for Mr. Puente. No life care plan or testimony from health care personnel, vocational specialists, or economists was introduced. Mr. Quintero stated that it is expensive to have life care plans and economist reports prepared. He stated that they are prepared only when there is adequate insurance coverage, and it is worth the expenditure. Mr. Quintero testified that he believed that 80 to 85 percent of a jury verdict in Mr. Puente's personal injury case would have been based upon pain and suffering and the inability to lead a normal life. He did not elaborate on how he arrived at this conclusion. Mr. Quintero testified that, although the value that a particular jury might put on a case can never be absolutely determined, in his opinion, a reasonable estimate of the value of Mr. Puente's damages was $2.5 million. He testified that, in his opinion, the range of damages would be from $2 million to $5 million and that $2.5 million was a conservative estimate. Mr. Quintero's testimony on this point was credible, Respondent offered no contrary testimony, and the value of Mr. Puente's damages is found to be $2.5 million. The settlement in the personal injury case was for the sum of $100,000. There was no direct evidence as to what portion of the $100,000 total settlement was designated by the parties as compensation to Petitioner for medical expenses, or conversely, for the various other types of damages he may have suffered, such as pain and suffering, scarring and other permanent physical injury, or loss of future earnings. Neither the settlement agreement itself nor any other documents prepared in connection with the settlement were introduced. Mr. Quintero offered no testimony on this issue. Based upon the evidence presented at hearing, all of the settlement might have been for medical care, or none of it might have been. It is possible that there was no discussion or understanding among the parties as to what portions of the settlement were to be allocated to Mr. Puente's various categories of damages, but such a conclusion would be pure speculation, for there was no testimony or other evidence to that effect. Mr. Puente did not show by clear and convincing evidence that the settlement was "unallocated" by the parties. The Florida Statutes provide that Respondent, Agency for Health Care Administration (AHCA), is the Florida state agency authorized to administer Florida's Medicaid program. § 409.902, Fla. Stat. The Florida Statutes provide that Medicaid shall be reimbursed for medical assistance that it has provided if resources of a liable third party become available. § 409.910(1), Fla. Stat. AHCA did not participate in settlement negotiations or sign any of the settlement documents. There was no evidence to suggest that AHCA otherwise released its lien. Application of the formula found in section 409.910(11)(f) to the $100,000 settlement in the personal injury case yields a Medicaid lien in the amount of $33,319.66. The $100,000 total recovery represents four percent of the $2.5 million total economic damages. Mr. Puente failed to prove by clear and convincing evidence that the settlement was unallocated as to categories of damages. Mr. Puente failed to prove by clear and convincing evidence that all categories of damages sought in the personal injury case were, or should be, compromised pro rata in the settlement. Mr. Puente failed to prove the amount of the settlement that should be allocated to medical expenses by clear and convincing evidence. Mr. Puente failed to prove by clear and convincing evidence that the statutory lien amount of $33,319.66 exceeds the amount actually recovered in the settlement for medical expenses.
